Rewriting The Employment Contract, Courtesy Of COVID

Thought Sparks

REWRITING THE EMPLOYMENT CONTRACT, COURTESY OF COVID

Rita Mcgrath

INTRODUCTION

As we begin to slowly emerge from the pandemic, some of the contours of what post-pandemic life will be like are starting to come into focus. As employees leave their old roles in droves and employers reconsider how this affects their business operations, a private equity firm, of all things, may be showing us the way forward.

Unprecedented turmoil in the labor markets

With annual turnover of jobs reaching 30% to 40% of the population, depending on whose statistics you read, it is clear that the post-pandemic employment scene is up for radical change. Over 50 million people quit their jobs in 2022 alone, according to government figures. It’s clear that returning to the 2019 state of play in the employment markets is highly unlikely. But why are so many people simultaneously deciding that a radical change is right for them?

TIME RICHNESS, RATHER THAN TIME POVERTY

The pandemic had the effect of making many people feel time rich. For many, not having to answer to the normal routine created a sense of having far more time than normal. We know from extensive research that feeling you have time leads to a willingness to consider more possibilities, be more curious and indulge in daydreaming.

AN INESCAPABLE CONFRONTATION WITH MORTALITY

The pandemic also pushed everyone – young, old, mid-life – into the contemplation of their own mortality. Ordinary tasks like going to the grocery store or turning up at work became potentially lethal encounters with a deadly virus. Even for young people, this meant that you couldn’t brush off the recognition that death might literally be right around the corner.

COUNTERFACTUAL THINKING

Another way in which the pandemic changed how we feel about work is that it sparked what academics call “counterfactual” thinking. That’s thinking about the road not taken in a manner of speaking. In “normal” life it happens to us when we encounter a surprise – say you trip over the slippers you left in the hall. It leads you to ask yourself “this never would have happened if I had only put them away.”

SPARKING IMAGINATION

For many, confronting a once-in-a-hundred-year, global event was a seismic challenge to taken for granted assumptions. Interestingly, when things are dramatically different, one of our responses as human beings is to launch our imaginations, as Martin Reeves and his colleagues at BCG have found.

We seek to figure out why our previous theory of how things work in the world is wrong. We consider what new activities might be possible. We imagine other alternatives. We consider solutions (and problems) we wouldn’t have paid any attention to before.

TOWARD A NEW EMPLOYMENT MODEL, FEATURING OWNERSHIP

We know that the people changing jobs and roles are not just looking for more money, although that was a result for many. They are looking for purpose, passion and something that will allow them to leave a legacy. And that has huge implications for employers.

In the midst of this landscape, here’s a super interesting development, brought to us by none other than the private equity firm, KKR.

The old playbook for private equity used to be to use financial engineering to take apart bloated old companies and sell the parts off for a profit. Maybe that worked in the 80’s, but it doesn’t work today. As an observer remarks, “the financial and operational maneuvers that buyout firms pioneered are now basic blocking and tackling for corporate CFOs….“Let’s not delude ourselves,” says John Skjervem, chief investment officer of the $100 billion Oregon State Treasury, a KKR investor since 1981.

WANT

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